Genesis Energy Announces Capital Bonds Offer

Genesis Energy Announces Capital Bonds Offer

Prospectus lodged

Funds will partly fund Tekapo A and B acquisition

Genesis Energy today confirmed it is seeking to raise funds through a Capital Bonds offer.

A Prospectus for the Capital Bonds offer was lodged today with the Companies Office and an Investment Statement for the offer is now available. The Capital Bonds offer will open on 15 April 2011 and close on 18 May 2011. Interested investors should talk to their usual financial advisers or contact one of the joint lead managers or the co-manager to the offer listed below. The Capital Bonds will be unsecured, subordinated, redeemable, cumulative debt securities maturing 15 July 2041. The Capital Bonds will carry a fixed rate of interest from the Issue Date until the First Reset Date on 15 July 2016. Interest Payments are to be paid quarterly until redemption of the Capital Bonds. The minimum holding for the Capital Bonds is $5,000 and applications must be for a minimum of $5,000 and multiples of $1,000 thereafter.

The net proceeds of the Capital Bonds offer will be used by Genesis Energy as part of the funding for the acquisition of the Tekapo A and B power stations, which comprise the 25MW Tekapo A power station, the 160MW Tekapo B power station and the Tekapo canal linking the two stations (the “Tekapo Stations”). The Tekapo Stations have an average annual output of 967 GWh.

The purchase price for the acquisition of the Tekapo Station is $821 million and the acquisition is anticipated to be completed in June 2011. The acquisition will be funded by a mixture of senior bank debt, existing cash and proceeds from the Capital Bonds offer, which is seeking to raise $225 million plus oversubscriptions of up to $50 million.

The Chairman of Genesis Energy, Dame Jenny Shipley DNZM, said the Capital Bonds will provide New Zealanders with an opportunity to invest in Genesis Energy, a State-Owned Enterprise and one of New Zealand’s largest energy companies with quality long-term energy assets, a substantial retail customer base and strong operating cash flows.

“The Government’s recent electricity industry reforms have provided an exciting opportunity for Genesis Energy to acquire the Tekapo Stations from Meridian Energy. This acquisition is consistent with Genesis Energy’s strategy of growing and renewing its generation assets and provides a growth opportunity that is available immediately and builds on Genesis Energy’s expertise in the management of hydro assets. It will give Genesis Energy access to long life generation assets that are not easily replicated in the New Zealand market, ensuring a more balanced and diversified generation portfolio with lower carbon intensity”, Dame Jenny said.

Disclosure Statement

7 April 2011

Genesis Energy Chief Executive, Albert Brantley, said “since the proposed transfer of the Tekapo Stations to Genesis Energy was announced, Genesis Energy has been actively attracting new South Island electricity and LPG customers. The company has signed up more than 20,000 new customers in Christchurch, Dunedin and Queenstown in the period from February 2010 to April 2011.

Genesis Energy continues its drive for more South Island customers. A number of workstreams to fully integrate the Tekapo Stations into its Production and Trading portfolios are underway.

A team based at Tekapo A has been appointed to maintain the Tekapo Stations and their daily despatch into the wholesale electricity market will be managed remotely from the company’s Renewable Energy Control Room, based at the Tokaanu Power Station near Turangi.

The Arranger and Joint Lead Manager of the Genesis Energy Capital Bonds offer is Craigs Investment Partners Limited.

The other Joint Lead Managers are ANZ, Forsyth Barr Limited and Westpac Institutional Bank. The Co-Manager is First NZ Capital Securities Limited.

All applicants will need to complete the application form that accompanies the Investment Statement. This advertisement is not an investment statement or prospectus and does not constitute an offer to subscribe for or buy Capital Bonds. Application has been made to NZX for permission to list the Capital Bonds on the NZDX market and all the requirements of NZX relating thereto that can be complied with on or before the date of this Investment Statement have been duly complied with. However, the Capital Bonds have not yet been approved for trading and NZX accepts no responsibility for any statement in this Investment Statement. NZX is a registered exchange, regulated under the Securities Markets Act 1988.

The Crown does not guarantee the Capital Bonds or any other obligations of Genesis Energy.

ENDS

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